October 26, 2016

Five Reasons the Oracle-NetSuite Acquisition is Great for Customers

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There’s been no shortage of opinions in the business and technology press recently about the Oracle-NetSuite acquisition. But while we’ve seen a great deal of discussion about the deal’s potential impact on stockholders and competitors, there’s been relatively little said about its ultimate effect on the customers the two companies serve. As someone who’s been advising companies on business management systems for 30 years, and on NetSuite implementations in particular for the last decade, I believe the change is going to affect both companies’ customers in several different ways – all of them for the better, in my view.

1. With NetSuite serving SMBs, Oracle can laser-focus on enterprise cloud solutions.

Oracle’s strength has always been in the enterprise market. Now it will have a foothold in the SMB market as well, thanks to NetSuite’s mighty presence there as a provider of cloud-based business management software. And with NetSuite taking care of business with SMBs, Oracle will be able to focus its resources and efforts on strengthening its Oracle Fusion cloud offerings for the enterprise. This is especially critical as older on-premise implementations approach end of life, and as more and more enterprises recognize the advantages of cloud. Oracle needs a strong solution to meet the growing need for cloud services. By shoring up Oracle Fusion’s strong financial management capabilities with core components in other areas, Oracle will be able to provide customers an outstanding alternative to SAP HANA and other cloud platforms.

2. The converse is true, too: NetSuite can keep the focus on its own key industry segments.

While Oracle rules in the enterprise market, NetSuite dominates in selected industry segments in the SMB market, like software design and development (including SaaS companies like themselves) and retail/etail (including ecommerce and warehouse management). With the acquisition by Oracle, there’s no reason for NetSuite to be distracted by expanding beyond those to reach new vertical markets or the enterprise market. I think the company’s customers will be glad to see NetSuite further developing the installation base it’s already built, and expanding the capabilities it delivers to them, while Oracle handles the enterprise business.

3. Oracle can take a page from NetSuite’s playbook on how to support cloud software.

Subscription software is implemented, supported and maintained differently than on-premise software – and nobody does it better than NetSuite. The company has figured out how to flawlessly execute six-month upgrades that affect thousands of customers at once, pretty much eliminating any risk of a negative impact from something going wrong in an upgrade. Oracle can take advantage of that mastery and apply it to its own enterprise cloud solution, ensuring that customers quickly get a mature support model for Oracle Fusion in the cloud. If any Oracle customers have been concerned about being the guinea pig for the company’s enterprise cloud efforts, I think this acquisition puts those worries to bed.

4. NetSuite can concentrate on product development instead of sales and services.

As Oracle knows, having a strong partner network to sell and deliver your software solution goes a long way toward freeing up internal resources to keep working on constantly improving that solution. With access to Oracle’s tremendous partner network, which includes strong relationships with consultancies like Deloitte, Accenture, KPMG and others, NetSuite can rely more on expert partners to handle sales and implementations. Currently, the company does about half its implementations itself and half through partners. Now, it will be in a position to follow Oracle’s lead in offloading more of that business to partners and concentrating its own resources on continuing to develop its offering. That’s a win-win for customers, who ultimately get a better product and also get outstanding professional services from companies that specialize in planning and carrying out technology implementations.

5. NetSuite will have access to far greater capital and development resources.

NetSuite will now have access to the capital needed to attract more business and ramp up  growth in the red-hot SMB market. I anticipate that NetSuite will be able to build on its reputation for serving that market well over the last ten years and, as a result, compete very successfully with the large, well-funded companies that are also after that market. The companies whose business NetSuite wins will benefit because of the broader depth of resources that NetSuite will now command as part of Oracle. The company will be able to innovate faster and attract an expanding base that allows continued reinvestment in the NetSuite platform. And that means customers can be assured of seeing new features released quickly and of always having the “latest, greatest” software.

Bringing It All Together

NetSuite’s customers, both current and new, also benefit from the financial stability that Oracle brings. The acquisition puts NetSuite on a firm financial footing that its customers will surely welcome. And while much remains to be seen as the process of integrating the two companies unfolds, I believe there’s no doubt that the customers of both companies are going to be biggest winners in this deal.

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About Michael Johnson

Michael Johnson leads Bridgepoint Consulting’s Technology Consulting practice, which helps organizations leverage technology to drive transformation. The practice specializes in designing and implementing innovative solutions that allow organizations to grow and scale efficiently.  He has 30 years of experience with integrated business solutions, including as managing director at KPMG Consulting, where he oversaw the planning and implementation of HR and finance business solutions for a range of organizations.

mjohnson@bridgepointconsulting.com Recent Blog Posts LinkedIn Full Bio